Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people.Money―investing, personal finance, and business decisions―is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world people don’t make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together.
When you see how people handle money, you will be tempted to think some are crazy. However, no one is crazy; people always make terrible money decisions. But it is not because they do not think properly; it is just that we all are different when it comes to money. People mostly believe that when you fail, you do something wrong. But moreover, when you succeed with an investment, you are a good investor. Nevertheless, the reality is sometimes different. Many smart planned investments failed; on the other hand, many profits have been obtained from seemingly unwise ones. Luck plays a role, but the opposite is also true. Some failures are due to unfavorable circumstances. Unfortunately, we can't do anything about luck and risk and how they affect our investments.
"Doing well with money has a little to do with how smart you are and a lot to do with how you behave. And these behavior are hard to teach, even to really smart people- Morgan Housel."
Monerd capitalism turns you into a perpetual money chaser. Unfortunately, many people don't realize they are already putting money above happiness. You may think you are working for yourself and your family's future, but the real reason could be that you are just working hard to earn more than a neighbor or a friend. The problem with this kind of competition is that you may risk more essential things in your pursuit of money—things like freedom, time, family, and even your reputation.
"Controlling your time is the highest dividend money pays"- Morgan Housel."
Treat personal and corporate finance as a long-term game, and you are more likely to last longer playing it. Investors who are only interested in short-term gains hardly play long. It's not about the skills; it's just that no one can predict the market. Sudden changes will surprise you, and because of this, countless investors have taken their lives. They made massive gains at some points in their career and got greedy since they felt they had become masters. Success is tricky, and investing is a risky game with the potential for high rewards. But you risk losing money if you are greedy and shoot to get those rewards quickly. The important part is the happiness that does not come with a high-paying career for the sake of money but rather when you give more premium to relationships.
The difference between riches and wealth is beyond semantics. Riches are what you see as an external observer, but wealth is usually hidden. Wealth is the money you save and invest; it's the assets you own. Most people don't see this; they see it as a display of riches, and anyone can appear to be rich by spending their money lavishly. As a matter of fact, many people who look rich are actually broken. So, it doesn't make sense to impress people at your own expense. Instead, focus on building wealth, not showcasing riches you can't afford. Finally, protect your happiness at all costs: stay out of shady deals, don't chase money, and always create time for the important thing in your life because, in the end, what's the use of money if you can't enjoy it?
In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics.
